Inside The Engine Accelerator, the anti-Y Combinator for 'tough tech' startups

• The Engine Accelerator in Cambridge supports startups with shared resources and lab equipment.
• It provides coworking space and specialized tools for "tough tech" areas like climate and health.
• The Engine charges rent instead of investing but may consider equity in lieu of rent in the future.

On a tour of The Engine Accelerator's offices in Cambridge, Massachusetts, Emily Knight walked me past a machine shop, labs for biology and chemistry work, a floor-to-ceiling refrigerator that houses a quantum computer, and a furnace that heats molten salts to 600 degrees Celsius. Nowhere was quite as electric, however, as the kitchen at lunch, where sharply dressed twenty-somethings jammed into booths, and their happy chatter drowned out the street traffic below.

"That is a highlight of this building that it's very close to talent — people who are still in this area because they just graduated," said Knight, The Engine's president and chief executive.

The Engine is where companies solving hard problems get off the ground. It's part coworking space, with open desks, office suites, and conference rooms for rent. It's part startup accelerator, hosting a high-octane circle of young scientists and engineers who need help turning their ideas into full-fledged operations.

If WeWork and Y Combinator had a baby, and that baby wanted to bring breakthrough research out of the lab and into the real world, it'd look something like The Engine.

Knight said the Engine exists to fill a market need. Founders in "tough tech" areas like climate, human health, and advanced systems often have difficulty finding stable support and access to the resources they need. They rely on specialized lab equipment that can cost millions of dollars, which they haven't yet banked from investors.

The Engine provides shared resources like chemistry fume hoods, flow cytometers, microscopes, spectrometers, ovens, and lathes. It has established partnerships with academic and research institutions statewide so startups can gain access to what tools they can't find under The Engine's roof.

"We take care of everything from the safety to the security to the concierge," said Knight. "So you can move in and on day one your bench is going to have some pipettes on it."

It's no surprise that The Engine has become a veritable petri dish for companies in areas like carbon capture, quantum computing, drug discovery, self-driving cars, satellites, and chips.

In his studies at Harvard, Adam Slavney and his cofounder Jinyoung Seo developed a new kind of solid refrigerant for heat pumps and air conditioners shown to be twice as efficient as those used today.

"We had made a pretty big scientific breakthrough that we thought maybe was useful," Slavney said, "but I had zero thoughts about how you would actually go about commercializing it."

A faculty member suggested he look into The Engine. A year later, he runs a startup, Pascal, out of the accelerator and has raised $8 million in funding from investors like Khosla Ventures.

The anti-Y Combinator

The Engine isn't a typical accelerator in one key way. It doesn't invest in startups. Rather, it charges rent by the square footage or number of desks.

That wasn't always the case.

Eight years ago, the Massachusetts Institute of Technology spun out a venture fund to help more students and faculty cross the chasm from a promising idea to a product in the market — and shorten the time it takes for their startups to become ready to raise from tech investors. It donated a building and put up $25 million as a limited partner for the debut fund.

The fund, Engine Ventures, and the accelerator were two halves of a whole until late last year when they parted into separated units. It tapped Knight, formerly chief operating officer, to spearhead the accelerator.

Knight says about a fifth of the companies in the building have raised money from Engine Ventures. She added that if she had the capital, she would invest in every startup that came through the doors.

The rent isn't cheap. Stwart Peña Feliz, a cofounder and chief executive of MacroCycle, a startup that turns plastic waste into virgin-grade recycled plastic, said he's paying double the monthly fees that a nearby climate-tech incubator charges. That facility didn't meet his ventilation needs, however.

But The Engine makes up for the high cost with "intangible benefits," Peña Feliz said. He's met potential investors at events. He leans on the other founders for advice. MacroCycle even signed The Engine as its first customer.

"It became apparent that the premium was worth it for the grand vision that we're trying to accomplish," he said.

The accelerator is now toying with the idea of taking equity in lieu of rent, Knight said. The idea is to make that trade and then allow the company to buy back its equity after a fixed period.

"We're not interested in complicating your cap table or in anything that would look predatory," Knight said. "I am interested in this being an accelerant."